Product Liability Insurance
Product Liability Insurance
If you have a product-based business or run an e-commerce store, you will always make sure that you produce, sell, and deliver good quality products. However, some things cannot be avoided. There will always be a customer who is dissatisfied with your product, or there may be errors and defects in your product that cause harm to the customer, resulting in the customer filing a lawsuit against you and your product.
These lawsuits can put a hole in your pocket, as your company is liable for any damages caused to the customer by your product.
It’s better to be covered for the future. In these situations, it’s always good to be insured. Product liability insurance is what you need to protect your business. Check out all the details of product liability insurance.
What Is Product Liability Insurance?
A product liability insurance policy protects distributors, wholesalers, and/or retailers against several losses and damages arising due to the use or consumption of the product that your company manufactures, sells, or distributes.
As a product seller, you may have to deal with the risks of your products causing damage to a user, their property, or their kin.
Product liability insurance covers all legal and financial liabilities that could otherwise lead to major hardship. This insurance will also cover medical costs, compensatory damages, and business damages.
Types of Product Liability Insurance
Based on your professional and business requirements, you can select an insurance plan. Product liability insurance can be of the following types:
A company cannot be a culprit in a tampering incident, but it can be liable for it. This type of insurance covers the risk of another person corrupting a product or warning of tampering intentions.
A specialty warranty form of coverage is introduced for manufacturers and shields them from losses arising out of performance failure.
Some of the products are prone to hazard liability, like drugs, chemicals, and cosmetics. This type of product liability insurance protects the company from any mishaps.
This particular insurance covers related recall costs, which include shipping expenses, overtime pay, product destruction costs, and more.
If damage is caused to a third person, company, or property, then this insurance policy will cover the loss or damage caused by the product.
Why Do You Need Product Liability Insurance?
The product liability insurance policy is recommended to business owners, product manufacturers, pharmaceuticals, and other similar niches. It is usually accrued by enterprises, which can be held accountable for legal and financial liabilities.
For example, you can get sued for promoting the sale of a defective product that can cause damage to the user or other products. In such situations, if you have a product liability insurance policy handy, then the insurance provider will remunerate the resulting legal costs.
Although product liability insurance is not mandatory, it does hold significance for certain industries.
If you operate in one of them, then this is a hint to buy product liability insurance today.
Benefits of Product Liability Insurance
Below are listed some of the potential benefits of product liability insurance.
- Protection from product design flaws : No matter how many times product testing is done, there can still be flaws that might appear and cause damage. Product liability insurance will provide comprehensive coverage for design flaws.
- Coverage of defects in the manufacturing process : One important aspect of product liability insurance is that it covers manufacturing errors that result in dangerous product problems.
- CGL coverage : However, there is a separate CGL policy that gives limited liability coverage. The product liability plan works together with CGL coverage to protect you from losses occurring because of product faults.
- Add on cover : With product liability insurance, the vendors can also benefit. As a vendor, one can get insured for liabilities occurring from insured product sales by identified and unidentified suppliers.
- Defective warnings : The policy also provides assertion if the product is not properly labeled or if the warning is insufficient for the consumer to grasp.
What is Covered Under Product Liability Insurance?
Product liability insurance offers coverage at the following points:
- Injury Caused by a Product : If the product you sell causes bodily injury, then the product liability insurance will cover the cost of hiring an attorney. It would also cover the settlement cost.
- Property Damage Caused by the Product : Product liability insurance will provide coverage in case the item you sell or manufacture damages the customer’s property.
- Illness Caused By a Product : This insurance coverage will protect you against illnesses caused by the products you sell. It can be due to an expired product or an allergic reaction.
- Wrongful Death Caused By a Product : Product liability insurance is made to provide coverage against lawsuits, burial costs, and other related expenses arising due to a death caused by your product.
What is Not Covered Under Product Liability Insurance?
There are some exclusions for all insurance plans. In the case of product liability insurance, the policy does not cover any liability for a product recall, a product guarantee, or any real financial loss such as loss of goodwill or loss of market.
The policy will also not pay for the costs arising out of repairing, reconditioning, or modifying the defective part of the product.
How To File a Claim For a Product Liability Insurance Policy?
The claim procedure for all types of insurance is almost similar although some steps can vary based on the different insurance providers.
The common claim process steps are :
First, fill out the claim form, duly signed by you, and provide a copy of all the necessary documents.
The claim process in the case of liability insurance is a little longer, as it involves court cases and legal jurisdictions.
Depending on the nature of your claim, further steps mentioned by the insurance provider will be taken.
To Sum Up!
The faster you get the right coverage for your business, the sooner you can focus on what matters – making your business flourish and your customers happy.
You can buy product liability insurance either directly from an insurer or from a specialist broker like Policy Wings. At Policy Wings, we will give you the best deal, and you can compare all the quotes on a single platform. Save time and get insured in just a few steps with Policy Wings.
Frequently Asked Questions
The premium amount for product liability insurance is calculated depending on the nature of the product, the company’s claim history, and your business record.
It is generally recommended for small businesses to get commercial general liability (CGL) insurance. Besides that, it totally depends on your unique situation.
Yes, you still need product liability insurance for several reasons. Your business might be unaware that it sold a defective product, a customer can file a claim for insufficient warning, or a customer can even sue you if he/she is unhappy with your product.
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